Factoring For Your Manufacturing Company
Many manufacturing companies issue invoices with aging periods of 30 days or longer frequently experience a strain on cash flow as expenses mount and customer payments come in at a slow, staggered pace. In the past, manufacturers would turn to traditional loans as a stopgap measure to cover meet payroll, pay vendors, and keep the operations running. However, over the recent years, many manufacturing companies have started using factoring services to not only pay expenses, but to accumulate growth revenue from unpaid customer invoices.
An Overview Of Factoring
Instead of taking on debt with a traditional bank loan, or employing the services of a collection agency, a factoring agreement can be arranged in 48 to 72 hours, through a commercial finance company. Once the agreement is signed, manufacturing companies can submit any unpaid invoices to the finance company in exchange for capital equal to the amount on the customer invoices, less a small administrative fee. Invoices are converted to working capital within 24 hours.
Clean Up Your Accounting
Factoring allows manufacturing companies to catch up on all unpaid invoices, and even submit invoices for capital as new customers have their orders filled, or to stay on top of large contract orders. Instead of tracking payments across multiple customer accounts, factoring gives manufacturing companies a central source of revenue. This means manufacturers can focus on growing their operations, rather than spending time and other resources trying to contact customers for payments due.
A Renewed Cash Flow For Manufacturing Companies
With invoices being submitted to the finance company in exchange for cash, manufacturing companies can remove the strain on cash flow, meet payroll, pay of creditors, and – most importantly – accumulate revenue for growth. Factoring services can be used for more than just a quick fix of working capital, they can be leveraged for long term growth. With a healthy and steady cash flow, many manufacturing companies retain factoring services to manage customer invoices as the business grows, to keep the burden off of accounting and maintain a centralized revenue stream.
If your manufacturing company is sitting on unpaid customer invoices, it is time to get the revenue you are owed. Call Davis Commercial Finance at 916-412-5577 today, and we will work with you to arrange a factoring agreement to get you the capital you need, or explore other financing options for growth and success.